Correlation Between Dupont De and Stone Harbor

Can any of the company-specific risk be diversified away by investing in both Dupont De and Stone Harbor at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Dupont De and Stone Harbor into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dupont De Nemours and Stone Harbor Emerging, you can compare the effects of market volatilities on Dupont De and Stone Harbor and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Dupont De with a short position of Stone Harbor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and Stone Harbor.

Diversification Opportunities for Dupont De and Stone Harbor

0.1

Correlation Coefficient

Dupont De  Stone Harbor

Average diversification

The 3 months correlation between Dupont and Stone is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Stone Harbor Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stone Harbor Emerging and Dupont De is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Dupont De Nemours are associated (or correlated) with Stone Harbor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stone Harbor Emerging has no effect on the direction of Dupont De i.e., Dupont De and Stone Harbor go up and down completely randomly.

Pair Corralation between Dupont De and Stone Harbor

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to generate 1.7 times more return on investment than Stone Harbor. However, Dupont De is 1.7 times more volatile than Stone Harbor Emerging. It trades about 0.17 of its potential returns per unit of risk. Stone Harbor Emerging is currently generating about 0.05 per unit of risk. If you would invest  7,633  in Dupont De Nemours on November 29, 2024 and sell it today you would earn a total of  512.00  from holding Dupont De Nemours or generate 6.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Dupont De Nemours  vs.  Stone Harbor Emerging

Dupont De Nemours

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dupont De Nemours has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Dupont De is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Stone Harbor Emerging

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Stone Harbor Emerging are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly inconsistent fundamental indicators, Stone Harbor may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Dupont De and Stone Harbor

The main advantage of trading using opposite Dupont De and Stone Harbor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, Stone Harbor can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Stone Harbor will offset losses from the drop in Stone Harbor's long position.

The idea behind Dupont De Nemours and Stone Harbor Emerging pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.